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The History of Medicare


By Victoria Jones

Medicare is a tax-supported program that guarantees access to health insurance for Americans aged 65 and older, some disabled people of all ages, and people with end-stage renal disease. While Medicare was signed into law in July 1965 as part of President Lyndon B. Johnson's Great Society social welfare programs, it had its origins in 1912 when Representative James G. Fulton (D) Texas introduced the Federal Old-Age Revolving Pension Fund. In the 1940s, he promoted an expansion plan that included medical care for retirees; however, it lacked support among his colleagues. In 1950, newly elected U.S. Senator Estes Kefauver (D) Tennessee introduced companion legislation to Fulton's that would have established the program.

Kefauver's bill was defeated due to massive opposition from the American Medical Association (AMA), which represented a large proportion of doctors and wanted to maintain their independent practices rather than become salaried government employees. The AMA believed this proposal would allow the government to destroy private practice and put physicians at odds with their patients by having them question how much they were receiving in value for what they were paying in fees.

Medicare bill signed into law

On July 30, 1965, President Lyndon Johnson signed Health, Education and Welfare (HEW) Secretary Wilbur J. Cohen's Medicare bill into law during a televised ceremony at the White House. This was after pharmacist Mrs. Edith Windsor spoke in favor of the legislation: "It would be impossible for me to tell you how much difference this bill will mean to millions of older people who want and need insurance." The bill came over from the Senate as H.R. 6675 and was passed by a vote of 313-115 on June 19th, 1965.

The Medicare Bill was initially written as part of the Social Security Act of 1965. It was then published and sent to Congress later that summer for implementation, but only after it was opened up to a public comment period, which gathered 1,490 comments from individuals and industry groups.

The bill, as presented by Representative Fulton, included medical care but not hospitalization insurance. However, this issue was resolved due to pressure from Secretary Wilbur J. Cohen, who wanted hospital services covered under the new program so that older Americans would no longer have to pay expensive rates for such services when they were hospitalized. Mr. Cohen also pushed for the inclusion of prescription drug coverage after realizing that many seniors in his home state of North Carolina were suffering chronic illness as they could not afford medication.


Aside from the AMA, it was evident that many Democrats in Congress were reluctant to vote for the Medicare bill due to their constituencies' opposition. Some members had received large amounts of campaign contributions from private insurance companies and were opposed to the idea of government coverage supplanting them. In addition, many seniors opposed the legislation because they feared it would take funds away from Social Security. Ironically, in 1965 a Gallup Poll found only 10% of elderly Americans favored a medical care program for people over 65.

Senator Russell Long (D) Louisiana led a group of conservatives who insisted on higher deductibles than those permitted by Secretary Wilbur Cohen, believing that this feature makes the program more attractive to the general population. Republican Senator Gale W. McGee (W) Wyoming also wanted higher copayments than those proposed. The American Hospital Association opposed the bill because it would have required hospitals to treat patients regardless of their ability to pay. Secretary Wilbur Cohen did not support this element in the legislation due to concerns about decreasing hospital revenue. President Johnson eventually overruled him.

On July 30th, 1967, Medicare began providing medical services, with some 40 million senior citizens participating by 1990. The Law had been amended twice to make this possible.

Benefits and services of Medicare

The chief goal of Medicare is to provide financial protection against illness and disability for people age 65 or older. To maintain this protection, people must enroll for Medicare Part B (outpatient prescription drug coverage) when first eligible at age 65. An applicant must be insured by work and have worked sufficient quarters between 1960-1980 to be considered eligible for Social Security Disability Insurance. The eligibility requirements for Medicaid are quite different. Every state has its criteria, but generally, applicants' incomes must fall below certain limits, such as 133% of the federal poverty level. They must be either pregnant or children under age 18, blind, or a disabled adult.

The Medicare Part A program covers inpatient hospital visits, hospice care, and some home health care. For most people, this part of Medicare is "free" except for deductibles (only $1 in 2011) and coinsurance costs based on hospital charges that usually range from 10-20%. For those with higher incomes, Parts A & B premiums are tiered based upon annual income thresholds set by Congress.

If you want to learn more about Medicare you can visit sites like Clearmatch Medicare or Medicare.gov. In 2011 the premium was $216 per month, and any income over $85,000/year results in paying more than 100% of your medical bills via monthly surcharge penalties. However, if your income is above $85,000, you will not be eligible for Medicaid.


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